What is a 1099-S Form?

What is Form 1099-S?

Form 1099-S is used to report the sale or exchange of real estate. This form must be filed for transactions that involve the sale or exchange of ownership interest in certain types of property, including:

• Land, whether it’s developed or undeveloped, including air space.
• Permanent establishments like residential, commercial, or industrial buildings.
• Condominium units, fixtures, common areas, and associated land.
• Shares in a cooperative housing corporation.
• Non-contingent interests in standing timber.

Form 1099-S is required whenever ownership in these types of real estate or related property is transferred for money, property, services, or a combination.

Who Must File Form 1099-S?

Form 1099-S, which reports the sale or exchange of real estate, must be filed by the person responsible for closing the transaction. The responsibility to file can vary based on the specifics of the transaction, as outlined below:

• Person Responsible for Closing the Transaction

  If you are the person responsible for closing the transaction, you must file Form 1099-S. When a Closing Disclosure is used under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the person listed as the settlement agent on that document is considered responsible. The Closing Disclosure replaces the HUD-1 Settlement Statement and the final Truth-in-Lending (TIL) statement, combining them into one form under the Real Estate Settlement Procedures Act (RESPA) and the Federal Truth in Lending Act.

  If no Closing Disclosure is used or no settlement agent is listed, the person who prepares a Closing Disclosure that identifies the transferor and transferee, describes the property transferred, and details how proceeds are to be disbursed is responsible for filing.

• If No One is Responsible for Closing the Transaction

  If no one is explicitly responsible for closing the transaction, the responsibility to file Form 1099-S falls in the following order:

  • Mortgage Lender: The lender providing new funds secured by the real estate, with priority given to the lender providing the most funds.
  • Transferor’s Broker: The broker who contracts with the transferor and is compensated for the transaction.
  • Transferee’s Broker: The broker significantly involved in preparing or presenting the offer to acquire the property.
  • Transferee: The person acquiring the greatest interest in the property.

• Designation Agreement

  A written agreement can be made at or before closing to designate who must file Form 1099-S. This agreement must:

  • Identify the designated filer by name and address.
  • Include the names and addresses of all parties to the agreement.
  • Be signed and dated by all parties involved.
  • Include the names and addresses of the transferor and transferee.
  • Provide sufficient details to identify the property.

Each signatory must keep a copy of the agreement for four years.

Bandit Tip: For each real estate transaction, it is really important to ensure that only one individual is responsible for filing Form 1099-S, and only one Form 1099-S is submitted for each transferor.

What are the Exceptions of Form 1099-S?

Certain transactions are exempt from the requirement to file Form 1099-S, although you may still choose to report them. Below are the main exceptions:

• Sale of Principal Residence
• Transactions Involving Corporations or Exempt Entities
• Non-Sale Transactions
• Debt Satisfaction
• De Minimis Transfers
• Certain Types of Property

These exceptions help clarify when filing Form 1099-S is unnecessary, reducing the reporting burden for certain types of transactions.

What information must be reported on Form 1099-S?

There is a series of specific information that must be provided on Form 1099-S. This includes, but is not limited to the closing date of the transaction, the gross proceeds, and the address of the property. The individual filing Form 1099-S will also need to indicate if the transferor is a foreign person and enter the buyer’s part of the real estate tax.

What is the deadline to file Form 1099-S?

The Form 1099-S deadline to file with the IRS is no later than March 31, 2025 for the 2024 Tax Year. In addition to filing with the IRS, a recipient copy must be provided to the transferors. The deadline to distribute copies of Form 1099-S is February 18, 2025.

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